Homework Answers
|
Internal Rate of return |
|||
|
a. |
First Investment |
20 |
% |
|
Second investment |
14 |
% |
|
|
b. |
V & K should select |
First investment as it has higher IRR |
|
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Check my work Velma and Keota (VK) is a partnership that owns a small company is...
Check my work Velma and Keota (V&K is a partnership that owns a small company. It...
Check my work Velma and Keota (V&K is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a four year useful te will cost $10,899.69, and will generate expected cash inflows of $3,000 per year. The second investment is expected to have a useful le of five years, wil cost $14058.63, and wil generate expected cash intows of $3.900 per yeat Assume that VK has the funds available to...
Thornton Company is considering investing in two new vans that are expected to generate combined cash...
Thornton Company is considering investing in two new vans that are expected to generate combined cash inflows of $32,000 per year. The vans' combined purchase price is $91,500. The expected life and salvage value of each are four years and $20,100, respectively. Thornton has an average cost of capital of 14 percent. (PV ory and PVA of $1 (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should be...
Franklin Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the...
Franklin Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company's cash outflow for operating expenses by $1,273,000 per year. The cost of the equipment is $7,558,690.83. Franklin expects it to have a 11-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)...
Dwight Donovan, the president of Finch Enterprises, is considering two investment opportunities. Because of limited resources,...
Dwight Donovan, the president of Finch Enterprises, is
considering two investment opportunities. Because of limited
resources, he will be able to invest in only one of them. Project A
is to purchase a machine that will enable factory automation; the
machine is expected to have a useful life of five years and no
salvage value. Project B supports a training program that will
improve the skills of employees operating the current equipment.
Initial cash expenditures for Project A are $120,000...
Daryl Kearns saved $280,000 during the 25 years that he worked for a major corporation. Now...
Daryl Kearns saved $280,000 during the 25 years that he worked for a major corporation. Now he has retired at the age of 50 and has begun to draw a comfortable pension check every month He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an Initial payment of $190,000. The following table presents the estimated cash Inflows for the two alternatives Year 1 Year...
TABLE 1 PRESENT VALUE OF $1 n 4% 5% 6% 7% 8% 9% 10% 12% 14%...
TABLE 1 PRESENT VALUE OF $1 n 4% 5% 6% 7% 8% 9% 10% 12% 14% 16% 20% 1 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 2 0.924556 0.907029 0.889996 0.873439 0.857339 0.841680 0.826446 0.797194 0.769468 0.743163 0.694444 3 0.888996 0.863838 0.8396190.816298 0.793832 0.772183 0.751315 0.711780 0.674972 0.640658 0.578704 4 0.854804 0.822702 0.792094 0.762895 0.735030 0.708425 0.683013 0.635518 0.592080 0.552291 0.482253 5 0.821927 0.783526 0.747258 0.712986 0.680583 0.649931 0.620921 0.567427 0.519369 0.476113 0.401878 6 0.790315 0.746215...
Velma and Keota is a partnership that owns a small company. It is considering two alternative...
Velma and Keota is a partnership that owns a small company. It is
considering two alternative investment opportunities. The first
investment opportunity will have a five-year useful life, Will cost
$19,680.96, and will generate expected cash inflows of $4800 per
year. The second investment is expected to have a useful life of
three years, will cost $12,885.48, and will generate expected cash
inflows of $5,000 per year. Assume that Velma and Keota has the
funds available to except only one...
Dwight Donovan, the president of Campbell Enterprises, Is considering two Investment opportunitles. Because of limited resources,...
Dwight Donovan, the president of Campbell Enterprises, Is considering two Investment opportunitles. Because of limited resources, he will be able to Invest in only one of them. Project A Is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment Initial cash expenditures for Project A are $101,000...
Seved Dwight Donovan, the president of Campbell Enterprises, is considering two investrhent opportunities. Because of limited...
Seved Dwight Donovan, the president of Campbell Enterprises, is considering two investrhent opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable fectory automation the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are...
PRESENT VALUE OF AN ANNUITY OF $ TABLE 2 4% 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431...
PRESENT VALUE OF AN ANNUITY OF $ TABLE 2 4% 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 5% 6% 7% 8% 9% 10% 12% 14% 16% 20% 2 1886095 1.859410 1.833393 1.808018 1.783265 1.759111 1.735537 1.690051 1646661 1.605232 1527778 3 2.775091 2.723248 2.673012 2.624316 2.577097 2.531295 2.486852 2.401831 2.321632 2.245890 2.106481 4 3.629895 3.545951 3.465106 3.387211 3.312127 3.239720 3.169865 3.037349 2.913712 2.798181 2.588735 5 4.451822 4.329477 4.212364 4.100197 3.992710 3.889651 3.790787 3.604776 3.433081 3.274294 2.990612 6...
Check my work Velma and Keota (V&K is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a four year useful te will cost $10,899.69, and will generate expected cash inflows of $3,000 per year. The second investment is expected to have a useful le of five years, wil cost $14058.63, and wil generate expected cash intows of $3.900 per yeat Assume that VK has the funds available to...
Thornton Company is considering investing in two new vans that are expected to generate combined cash inflows of $32,000 per year. The vans' combined purchase price is $91,500. The expected life and salvage value of each are four years and $20,100, respectively. Thornton has an average cost of capital of 14 percent. (PV ory and PVA of $1 (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should be...
Franklin Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company's cash outflow for operating expenses by $1,273,000 per year. The cost of the equipment is $7,558,690.83. Franklin expects it to have a 11-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)...
Dwight Donovan, the president of Finch Enterprises, is
considering two investment opportunities. Because of limited
resources, he will be able to invest in only one of them. Project A
is to purchase a machine that will enable factory automation; the
machine is expected to have a useful life of five years and no
salvage value. Project B supports a training program that will
improve the skills of employees operating the current equipment.
Initial cash expenditures for Project A are $120,000...
Daryl Kearns saved $280,000 during the 25 years that he worked for a major corporation. Now he has retired at the age of 50 and has begun to draw a comfortable pension check every month He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an Initial payment of $190,000. The following table presents the estimated cash Inflows for the two alternatives Year 1 Year...
TABLE 1 PRESENT VALUE OF $1 n 4% 5% 6% 7% 8% 9% 10% 12% 14% 16% 20% 1 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 2 0.924556 0.907029 0.889996 0.873439 0.857339 0.841680 0.826446 0.797194 0.769468 0.743163 0.694444 3 0.888996 0.863838 0.8396190.816298 0.793832 0.772183 0.751315 0.711780 0.674972 0.640658 0.578704 4 0.854804 0.822702 0.792094 0.762895 0.735030 0.708425 0.683013 0.635518 0.592080 0.552291 0.482253 5 0.821927 0.783526 0.747258 0.712986 0.680583 0.649931 0.620921 0.567427 0.519369 0.476113 0.401878 6 0.790315 0.746215...
Velma and Keota is a partnership that owns a small company. It is
considering two alternative investment opportunities. The first
investment opportunity will have a five-year useful life, Will cost
$19,680.96, and will generate expected cash inflows of $4800 per
year. The second investment is expected to have a useful life of
three years, will cost $12,885.48, and will generate expected cash
inflows of $5,000 per year. Assume that Velma and Keota has the
funds available to except only one...
Dwight Donovan, the president of Campbell Enterprises, Is considering two Investment opportunitles. Because of limited resources, he will be able to Invest in only one of them. Project A Is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of five years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment Initial cash expenditures for Project A are $101,000...
Seved Dwight Donovan, the president of Campbell Enterprises, is considering two investrhent opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable fectory automation the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are...
PRESENT VALUE OF AN ANNUITY OF $ TABLE 2 4% 0.961538 0.952381 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 5% 6% 7% 8% 9% 10% 12% 14% 16% 20% 2 1886095 1.859410 1.833393 1.808018 1.783265 1.759111 1.735537 1.690051 1646661 1.605232 1527778 3 2.775091 2.723248 2.673012 2.624316 2.577097 2.531295 2.486852 2.401831 2.321632 2.245890 2.106481 4 3.629895 3.545951 3.465106 3.387211 3.312127 3.239720 3.169865 3.037349 2.913712 2.798181 2.588735 5 4.451822 4.329477 4.212364 4.100197 3.992710 3.889651 3.790787 3.604776 3.433081 3.274294 2.990612 6...
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